Insights

On December 17, 2025, the Joint Economic Committee held a hearing on realigning health care incentives to improve outcomes and reduce costs. The committee was very interested in the ideas shared by the witnesses and in working together to find long-term ways to reduce health care costs.

WITNESS TESTIMONY

• Mr. Brooks Tingle, CEO, John Hancock Financial – Testimony

• Dr. Ed Clarke, Vice President, Chief Medical Officer of the Insurance Division, Banner Health – Testimony

• Mr. Avik Roy, Co-Founder and Chairman, The Foundation for Research on Equal Opportunity – Testimony

• Mr. Matthew Fiedler, Senior Fellow, Brookings Institution Center on Health Policy – Testimony

MEMBER DISCUSSION

Vice Chairman Eric Schmitt (R-MO) began the discussion by asking how policymakers can address families applying for coverage without immigration status verification. Mr. Roy responded that verifying social security numbers could improve program integrity across both income and immigration status verification. He also suggested basing subsidies on the previous year’s tax returns instead of estimated future income. To address the issue of overutilization, Mr. Clarke recommended the Banner Model, which manages a population. Mr. Clarke argued that this incentivizes preventive care and primary care to reduce costs.

Ranking Member Maggie Hassan (D-NH) asked Mr. Tingle to speak to the positives of preventive and primary care, specifically for cost reduction. Mr. Tingle shared that prevention and early detection are key to success, but his company also believes it has a responsibility to ensure its customers have access to advancements in screening and technology so they can use the information to inform decision-making. Ranking Member Hassan then asked how increased access to enhanced Advance Premium Tax Credits (APTCs) in the ACA marketplace can lead to better preventive care. Mr. Fielder responded that if an individual is uninsured, they have reduced access to care, especially preventive care, which can lead to higher costs down the road.

Rep. Nicole Malliotakis (R-NY-11) questioned how to incentivize better, healthier decisions to lower premium costs. Mr. Roy responded that the ACA prevents charging different premiums based on health status, which he argued can make it difficult to incentivize health in the short term. He recommended adopting the Swiss model, where, among other differences, health insurance plans span multiple years and refunds can be issued for improved health status. When Rep. Malliotakis asked about how to reduce predatory pharmacy benefit manager (PBM) practices, Mr. Fiedler shared that it is difficult since there is very little competition for PBMs. Fixing that, he said, is the first step to addressing the issue.

Rep. Gwen Moore (D-WI-4) expressed her frustration that the Congressional Budget Office (CBO) does not score preventive care well, which can make it difficult to craft legislation for preventive care. She questioned whether the large increase in premium prices could be traced to the ACA, but Mr. Fiedler responded that ACA marketplace premiums are comparable to private insurance premiums. He also shared that health care as a share of US GDP has remained steady over the last decade.

Sen. Ashley Moody (R-FL) asked the panel whether there should be a health care fraud czar to oversee the numerous health programs, but Mr. Roy felt that improving program structure overall would be more effective at reducing fraud.

Rep. Don Beyer (D-VA-08) asked Mr. Fiedler how he should respond to hospital arguments against site-neutral payment. Mr. Fiedler responded that he did not think the services targeted for site-neutral payments are any more complex in hospital settings than in other care settings, which he said was the main argument hospitals use. Rep. Beyer then asked how the US can move away from the employer-based insurance system. Mr. Roy shared that the best approach would be to create an individual market with affordable plans offering high-quality care, which employers can then help fund.

Sen. Amy Klobuchar (D-MN) requested that Mr. Fiedler share how extending the enhanced APTCs could impact competition. Mr. Fidler shared that tax credits allow more individuals to purchase care, thereby expanding the market. As a result, he said, more insurers enter the ACA market, which increases competition. Sen. Klobuchar then asked Mr. Clarke to explain how quality, affordable coverage leads to more preventative care. Mr. Clarke responded that rewarding physicians for improved patient outcomes, which can only be achieved through health insurance coverage, creates better incentives for primary care physicians to engage in preventive patient care.

Chairman David Schweikert (R-AZ) was curious about what has been the biggest success in incentivizing behavior change. Mr. Tingle responded that the biggest surprise is that behavior change is achievable with the correct incentives and that small prices, such as a $5 gift card, have incentivized the behavior change. In discussing ways to reduce health spending with Chairman Schweikert, Mr. Roy pointed out that while prevention can reduce costs, it can also lead to higher expenditure. Mr. Clarke favored a capitation model, but Mr. Fiedler suggested that a complete capitation model might result in reduced health services.

On December 11, 2025, the Medicaid and CHIP Payment and Access Commission (MACPAC) met for their December meeting. The Commissioners examined strategies for implementing the community engagement requirements which were signed into law under the One Big Beautiful Bill Act.

CONSIDERATIONS FOR IMPLEMENTING COMMUNITY ENGAGEMENT REQUIREMENTS: FINDINGS FROM STAKEHOLDER INTERVIEWS

MACPAC staff began by reviewing the community engagement requirements and current clarifications before sharing their findings from stakeholder interviews. The interviews were conducted between June and August of 2025 and included stakeholders such as CMS officials, state Medicaid directors, representatives of national advocacy organizations, and think tank staff.

One of the largest concerns raised by interview participants was how states will access community engagement data. For example, while free data sources are available, they are often not updated in a timely manner or provide aggregated data, making it difficult for state Medicaid agencies to comply with verification requirements. Paid data sources can be timelier but are also expensive. For example, it was reported that North Carolina’s contract with Equifax for its data set doubled from 2022 to 2025. Stakeholders have requested that Centers for Medicare and Medicaid Services (CMS) provide guidance on free data sources or enter into agreements to reduce costs for paid data sources.

Another major concern raised by stakeholders is the cost of IT infrastructure changes. These infrastructure changes are needed to adequately meet reporting requirements but can cause administrative budgets to balloon. For instance, Georgia recently saw 90% of administrative spending go towards IT infrastructure upgrades.

During Commissioner discussion, there continued to be concerns raised about the cost and requirements of implementing new IT structures. One Commissioner verified that state funds were still being matched at a rate of 10 to 90 for IT upgrades. There was also concern about how to best report verification data, especially for populations that may not have access to technology or digital tools. One suggestion was to look for ways to track and manage data that does not put the impetus on the individual to prove their exemption status or continued eligibility.

The opportunities for managed care organizations were also discussed, with multiple Commissioners highlighting how they have previously been critical to successful engagement with their members. Commissioners discussed continuing to explore how other similar partners could increase engagement, especially in maintaining timely data and finding a framework for effective monitoring.

One Commissioner emphasized the importance of understanding and comparing infrastructure and policy decisions across states to gain a clearer picture of how each state is managing the rollout. The Commissioner noted that this would become more important if some states see enrollment numbers drop drastically, and that it is important to pause and intervene to prevent large population segments from losing their health care coverage.

The Chair concluded the session by suggesting that the Commission should reexamine some rules and regulations regarding managed care plans and their role in helping individuals remain eligible.

EXPERT PANEL ON IMPLEMENTING COMMUNITY ENGAGEMENT REQUIREMENTS

MACPAC invited Lindsay Browning, Deputy Executive Director of Programs, National Association of Medicaid Directors, and Caprice Knapp, Principal Deputy, Center for Medicaid and CHIP Services, to answer questions from MACPAC staff and Commissioners.

The panel opened with questions from MACPAC staff. The first topic focused on what Ms. Browning and Ms. Knapp were hearing from states, as well as the deeper policy questions states have been grappling with. Ms. Knapp answered that CMS is seeing a lot of alignment with the responses MACPAC staff have reported from stakeholders, with the greatest emphasis on timelines and IT infrastructure. Deeper policy questions have related to how best to convert the data states can access into acceptable formats and how to partner with the respective Departments of Education. She emphasized that questions can be sent to medicaidreforms@cms.hhs.gov. Ms. Browning also noted alignment with interviews conducted by MACPAC staff, in which states emphasized concerns about member engagement. She also said she has been receiving policy questions about differential impacts of the community work requirements between states and how states can best show a clear paper trail for future audits.

When asked about which areas state agencies are seeking additional federal guidance, Ms. Browning emphasized the need for states to receive early signals from CMS about future guidance. More clarity on where CMS will be specific or flexible with implementation requirements, what the minimum product looks like for IT solutions, and data reporting expectations were also of interest. Ms. Knapp did not provide a clear answer on what additional guidance states could expect from CMS before June 2026. She did highlight the monthly informational calls and all state calls that CMS intends to continue as good sources of information and early signaling.

Ms. Browning was also asked about what lessons from the recent unwinding of the Public Health Emergency (PHE) could be applied to the rollout of the community engagement requirements, Ms. Browning made it clear that while there are similarities, the new community engagement requirements are not an established body of policy that can be examined; instead, decisions are being made now and in the future. That said, she feels that the increased automation of eligibility policies and the advancement of community engagement structures in the unwinding were helpful. Ms. Knapp emphasized the importance of outreach and vendor and managed care plan engagement for being successful.

Answers to questions about monitoring implementation and data collection emphasized minimizing the burden on states by clarifying what needs to be reported and creating a list of a reasonable number of measures. Building on existing systems and adopting a collaborative approach with CMS were listed as strategies for long-term implementation success.

The floor was then opened for Commissioners to ask questions directly, starting with what states are seeing as initial priorities. Ms. Knapp shared that, in her experience, states are seeking guidance on the minimum viable product for data reporting and clarification on qualifying events and medical fragility exemptions. Ms. Browning reported that states are most concerned with verifying employment, income, and education, with discussions about expanding to the volunteering category to take place later.

A couple of Commissioners raised concerns about how CMS will evaluate whether states are prepared to roll out the new requirements. Ms. Knapp assured questioners that both IT and policy readiness review parameters are in place. CMS is also working with states that are choosing to start implementation early, allowing them to avoid disenrolling individuals through a hold-harmless period. CMS can also step in and put a state on pause if there are unexpected events, such as large numbers of disenrollments.

When asked how MACPAC can be helpful to states and CMS during the lead-up to January 2027, Ms. Browning emphasized recommendations on outcome measurement, specifically identifying a small set of meaningful measures to best monitor and track eligibility requirements. Other recommendations about member outreach were also suggested.

The cost of IT infrastructure procurement was also discussed, with Commissioners wondering how states can keep costs down. Ms. Knapp emphasized that Administrator Oz was meeting with vendors to figure out solutions to high procurement costs, especially for systems that multiple states would be interested in. Ms. Browning raised the need for continued evaluation of data source costs, specifically for states finding high-value data from lower-cost sources.

On December 10, 2025, the Senate Committee on Homeland Security Subcommittee on Investigations held a hearing on principles to fix healthcare. Democratic Senators focused on the need to extend the enhanced Advance Premium Tax Credits (APTCs) while Republicans were firm that the Affordable Care Act (ACA) needs a complete overhaul.

OPENING STATEMENTS

• Chairman Ron Johnson (R-WI)

WITNESS TESTIMONY

• Mr. Christopher Briggs, Obamacare Enrollee – Testimony
• Mr. Nick Stehle, Obamacare Enrollee – Testimony
• Mr. Joel White, President, Council for Affordable Health Coverage – Testimony
• Mr. Tarren Bragdon, President and Chief Executive Officer, Foundation for Government Accountability – Testimony
• Mr. Dan Jacobs, Small Business Owner and ACA Marketplace Enrollee – Testimony
• Mr. Aaron Lehman, Farmer and ACA Marketplace Enrollee – Testimony

MEMBER DISCUSSION

Sen. Rick Scott (R-FL) stated he understands how important it is for people to have access to health care they can afford, which is why he has introduced S.3264, a bill that would establish HSA-style accounts through which individuals could purchase health care. Mr. White was in support of the bill, indicating that it will help the small business market. Mr. Bragdon was also in support of the bill, stating, “putting money in patients’ pockets is transformative.”

Sen. Bernie Moreno (R-OH) stated that only a small percentage of Americans are affected by the expiration of APTCs, and therefore, said more work needs to be done to reduce costs for all Americans. Some ideas he shared were increased transparency in health care costs, the use of association health plans, and reforms of certain practices by pharmacy benefit managers (PBMs).

Sen. Elissa Slotkin (D-MI) shared that while the ACA is not perfect, it did provide affordable coverage for people with pre-existing conditions. She also said she is not willing to take away enhanced ATPCs while Congress considers other policies to improve the affordability of health care.

Ranking Member Richard Blumenthal (D-CT) asked Mr. Lehman to share his recent experience shopping for a health care plan. Mr. Lehman indicated that seeing the rise in premiums resulted in intense sticker shock, which has made him and other farmers he represents nervous about how they will afford coverage. Ranking Member Blumenthal asked Mr. Jacobs how not extending APTCs would affect his business. Mr. Jacobs expressed concern about how the rise in premiums will lead to less consumer spending, especially in the service industry, and he is expecting many small businesses to close as a result. Ranking Member Blumenthal indicated that he would like to tackle additional health care challenges, but APTC extension is on a tight timeline that needs to be addressed immediately.

Chairman Johnson was strongly opposed to extending APTCs, repeating that now the subsidies are returning to the rates that were originally set in the ACA. He is in support of returning to the high-risk pool model for individuals with pre-existing conditions, feeling that it provides a good option to receive health insurance. Chairman Johnson asked Mr. White about the rise in insurance company’s stock prices and how to drive down health care costs. Mr. White shared that the increase in the stock price was directly correlated with the increase in the premium price. Mr. White indicated that the only way to decrease costs was to bring consumerism back to health care. Mr. Bragdon also supported the statement, saying that without consumerism, there is no incentive to reduce costs.

Chairman Johnson asked Mr. Lehman and Mr. Jacobs what percentage of their income an individual pays for health insurance before a subsidy should begin to apply. Mr. Lehman did not have an exact figure in mind, and Mr. Jacobs responded that he “is not a policy maker” and is “a bad person to ask” because he “would rather pay more so people who make less can have better health care.”